Government by Holiday Inn Express

Government by Holiday Inn Express
Mona Charen
Tuesday, October 27, 2009

You've seen those commercials in which an airline pilot, or surgeon, or nuclear engineer is giving expert advice only to acknowledge eventually to this nonplussed listeners that while he is not actually a fill-in-the-blank, he did stay at a Holiday Inn Express last night. Do you ever get the feeling that we are getting Holiday Inn Express government?

Does anything they say make basic economic sense? President Obama and the Democratic Party propose to save money (or what they call "bend the cost curve") on health care spending. They will spend less, they say, but also cover more people -- the 47 million or 30 million uninsured (Obama has used both numbers). This will be accomplished without reducing care for anyone and without raising taxes on anyone except the rich. In fact, care will be improved.

Sounds great. But do these people know what they're doing? They mouth the words "choice" and "competition" but only, ironically, in praise of a "public option." The concept of encouraging choice and competition in the health insurance market -- say by permitting interstate sales -- is off the table.

The Wall Street Journal provided a handy chart of "Uncle Sam's Cost Overruns." In 1965, when Medicaid was enacted, the House Ways and Means Committee estimated that first year costs would amount to about $238 million. The actual price was $1 billion. The program now costs $251 billion annually and is climbing fast. The record is similar for Medicare. In 1965, Congress predicted that by 1990, Medicare would be costing $12 billion. The actual cost -- $90 billion. As Peter Orszag, director of the Office of Management and Budget has admitted, "If costs per enrollee in Medicare and Medicaid grow at the same rate over the next four decades as they have over the past four, those two programs will increase from 5 percent of GDP today to 20 percent by 2050."

So the same people who brought you cost spirals in Medicare and Medicaid now propose to introduce another government health program. Don't worry, they assure us, we know how to provide efficiencies. It's not necessary to dwell on the risible claim that they will cut half a trillion in waste from the Medicare budget. If they know where that waste is, why aren't they cutting it now? Where, on the books, are the federal waste-cutting initiatives?

The administration has also highlighted two other ideas that will supposedly provide tremendous cost savings. Both have been in the news lately.

Starting during the campaign, President Obama touted digital medical records to reduce errors, improve care, and cut costs. More than $19 billion of stimulus funds were earmarked for it. But when the Washington Post examined the matter, they discovered that digital records not only fail to produce the promised benefits, they actually reduce efficiency and cause errors. The digital systems currently available give physicians too much information. Pages upon pages of digital information document every conceivable ailment a patient might have. Doctors have difficulty wading through all of the unnecessary data to reach the critical information. One emergency room physician at a hospital that had adopted a digital system complained, "It's been a complete nightmare. I can't see my patients because I'm at a screen entering data . ... Physician productivity and satisfaction have fallen off a cliff." Some hospitals have adopted digital systems only to abandon them.

Another silver bullet the administration has peddled is preventive care. Everyone knows that a timely PSA test will detect prostate cancer at an early and treatable phase thus saving the patient's life and saving money, right? Not exactly. The test is obviously worthwhile for that individual. But testing all men for prostate cancer -- an overwhelming majority of whom will never get the disease -- is expensive. If more and more of us are tested for more and more diseases -- even accounting for some illnesses found early -- health spending will rise, not fall. Further complicating the picture, the National Cancer Society has announced that the benefits of cancer screenings, particularly for breast and prostate cancers, have been oversold. They aren't saving very many lives, but they are causing needless tests and surgeries.

The Baucus bill -- even before being melded with House versions -- weighed in at 1,502 pages of new taxes, fees, and mandates. Every single page proclaims something that is dubious -- that the Democrats know what they are doing.
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and while on the same subject....

Welcome to the Health Care Free Lunch Cafe
Michael Tanner
Wednesday, October 28, 2009

It used to be said that there is no such thing as a free lunch. But when it comes to health care reform, President Obama appears to be offering up a free breakfast, lunch, dinner and bedtime snack.

At the core of the president’s proposal is the idea that he can provide more health care services to more people and have it cost less. A neat trick – but one that flies in the face of economic reality, not to mention common sense.

For example, the president wants to require insurance companies to cover people with pre-existing conditions, that is, people who are already sick. Doing so will cost money. And where will that money come from? Insurance companies will simply raise premiums for the rest of us.

Similarly, the president would mandate that all insurance plans provide a new government-designed minimum benefits package. In addition to the usual coverage for hospitalization, physician services and so on, all insurance plans would also have to include coverage for prescription drugs, rehabilitation services, mental health and substance-abuse treatment; preventive services and maternity, well-baby, and well-child care, as well as dental, vision, and hearing services for children under age 21. If that’s not enough, he would also establish a new federal commission headed by the surgeon general, which will have the power to develop additional minimum benefit requirements. There is no limit to how extensive those future required benefits may be.

Those additional benefits may or may not help consumers, but insurers are not going to provide them for free. In fact, some—like mental health and substance-abuse treatment—can add as much as 10 to15 percent to the cost of a policy. The president would also limit the size of deductibles and co-payments and would prohibit lifetime limits on the amount of benefits that insurance companies pay.

Indeed, some estimates suggest that the president’s plan could add anywhere from 75 to 95 percent overall to the cost of insurance premiums, especially for young and healthy people.

The president also wants to subsidize insurance coverage for millions of Americans, some of whom are uninsured, but millions of whom already have insurance today. The health care bills currently making their way through Congress include subsidies for families earning as much as 300 percent of the poverty level, $66,000 for a family of four. That’s the main reason these plans cost $900 billion or more.

But not to worry. The president says he won’t have to raise middle-class taxes to pay for all this. Health care reform will mostly pay for itself through greater efficiency, emphasis on preventive care, and electronic medical records. Of course, experts from across the political spectrum, not to mention the Congressional Budget Office, say that those measures won’t come close to covering the bill’s cost. Maybe that’s why the House version of the health care bill contains more than $880 billion in new taxes. The slightly cheaper Senate version raises taxes by at least $357 billion, not counting the tax penalty on those who fail to comply with the bill’s insurance mandate.

Of course, the president also promises that he can cut $500 billion from Medicare spending over the next 10 years without anyone getting less of anything. All he has to do is eliminate “fraud, waste, and abuse.” Not to be overly cynical, but presidents have been promising to eliminate "waste, fraud, and abuse" since at least, oh, Ronald Reagan. More neutral observers acknowledge that Medicare cuts of that magnitude will inevitable mean reductions in services.

Back when he was running for president, Barack Obama used to talk about “making the tough choices” and “being honest about the challenges we face.” That’s all gone now. Today the president is head chef at the free lunch café.